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Johannesburg - KT Corp has cut its offer for a 20%
post-issue stake in operator Telkom [JSE:TKG] by nearly a third, bringing the
total sale value down to about R3.3bn.

South Korea's No 2 mobile operator had initially intended
to pay R36.06 per ordinary share, but has reduced the offer by 29% to R25.60,
representing a 10% premium to Friday's closing price, Telkom said.

The fixed-line company that is majority owned by the government has been struggling to keep up with bigger
mobile operators MTN Group [JSE:MTN] and Vodacom
Group [JSE:VOD].

Shares of Telkom, which has forecast that its earnings for
the year ended March fell by at least 25%, are down nearly 20% this year.

"I think the deal itself is slightly positive for
Telkom as it gives them a capital injection and they would gain from KT's
knowledge base," said David Lerche, a telecoms analyst at Avior Research.

He said the deal includes an issue of 130 million new shares
for KT, which would dilute the government's shareholding to 32% from the
current 42%.

KT has been scouring for opportunities in Africa, Latin
America and Eastern Europe seeking to grow earnings as competition back home
heats up.

Battered in recent years by steadily falling fixed-line
revenue and expensive blunders in Nigeria, Telkom has been looking to offset
shrinking demand for its core business by pushing into new businesses and
markets.

The company has also been beset by other problems at home, with the competition regulator asking in February that it be fined R3.5bn
for an excessive pricing complaint logged back in 2004.

A court ordered a stop to its network overhaul
in April, in a petition by an infrastructure provider disqualified from a
bidding process related to the project.

Analysts say the government could place some
hurdles to the effectiveness of the partnership with KT, like any attempts to
reduce a bloated payroll.

Telkom shares are up 0.6% at R23.55, compared with a 0.5%
decline by the All Share [JSE:J203] index.

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